Judge orders more changes to Borders' executive bonus plan
Ann Arbor-based Borders Group Inc. today agreed to revise its executive bonus plan by tying the possible payments for the top executives to the company's ability to pay unsecured creditors, according to a Bloomberg report.
But a New York bankruptcy court judge instructed the company to make further revisions to the plan before he would approve it, according to the report.
Borders appeared before the judge this afternoon to request the right to distribute up to $7.8 million in executive bonuses if the company successfully and quickly exits the bankruptcy process.
Under the new terms of the plan that Borders and the creditors agreed to before visiting the judge, the amount of money the company pays out to creditors would determine the size of the top executives' bonuses.
The parties were set to discuss a revised version of the new plan with the U.S. Department of Justice trustee, who last week filed an objection to the plan, saying that Borders had not proved it was warranted at this stage in the bankruptcy process.
In a response this week, a Borders consultant requested that the court take "immediate action" to authorize the bonus plan, saying that the company was facing an exodus in employees that must be stopped.
Borders, which filed for Chapter 11 bankruptcy on Feb. 16, is closing 226 superstores nationwide, including the location at Arborland Center on Washtenaw Avenue.
The bonuses would be distributed if Borders:
â€¢ Can convince the bankruptcy judge to approve a reorganization plan that involves the company's survival. For the top executives, the bonuses are also tied to the company's ability to get the plan approved within five months of the plan's submission.
â€¢ Successfully attracts a buyer that would continue to operate the company.
Meanwhile, Borders also revealed last week that it is considering moving its headquarters out of Ann Arbor. The company plans to exit its corporate headquarters on Phoenix Drive in favor of cheaper space somewhere else in metro Detroit, which, the company said, could still be Ann Arbor.